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While the value proposition for manufactured housing is well known to industry professionals, showing or explaining that value to the mainstream can be a challenge.

According to recent information from NAREIT, that appears to be changing.

New data shows that manufactured housing REITs now occupy an enviable place in real estate, combining a dearth of new supply with a heavy demand for affordable housing options.

“Approximately ten new manufactured home communities have been built in the United States in the past two decades, an eye-popping anomaly among real estate sectors,” said Ryan Burke, an analyst at Green Street Advisors.

“Aging baby boomers are driving demand at age-restricted communities, while all-age communities are popular with younger families looking for affordable housing options. Nowhere else in real estate do we see this complete lack of new supply and the favorable demand dynamics. It’s a pretty good story.”

R.W. Baird analyst Drew Babin agrees.

“Manufactured housing REITs and existing owners of manufactured housing communities currently have a chokehold on the market,” said Babin.

While it may seem that the favorable metrics would be lost in the shuffle with investors, that isn’t the case. In 2016, manufactured housing REITs delivered returns of 28.5 percent, beating out apartment REITs by nearly ten percent, and single-family home REITs by nearly 14 percent.

Ryan Burke. Credit: Green Street Advisors.

“As manufactured housing continues to outperform other sectors, particularly in the private market at the property level, there’s no way the outperformance will go unnoticed,” said Burke, who also addressed some of the challenges to entering the market.

“Among the barriers to entering the manufactured housing market are the communities’ long lease-up periods. It can take more than five years to reach a stabilized occupancy level. It’s tough for a developer to be able to underwrite that lease-up period,” said Burke.

Other market analysts predict acquisitions in the space will be “episodic.” According to Green Street, manufactured housing REITs own about 1 percent of the estimated 50,000 manufactured housing communities in the U.S., but nearly 15 percent of the institutional-quality stock. (It should be noted that some MHC experts put the total number of communities at about 45,000 nationally).

With new supply largely non-existent, analysts believe that REITs will try to grow their portfolios through acquisitions, and through expanding existing sites. An example cited was Sun Communities 2016 acquisition of Carefree Communities Inc., for $1.7 billion.

Credit: Sun Communities.

And, while there may be more “whale” sized acquisitions – like Carefree communities – available in the market, Burke says that he sees smaller deals on the horizon – at the right price.

“Most of the manufactured housing parks [sic] are held by smaller investors that own up to three properties,” said Burke.

“They hesitate to sell for several reasons: they make a good living from the properties; they would be hit with high taxes if they sold; and many sellers would be unsure how to reinvest the proceeds to achieve similar yields. There’s a whole lot of demand for these properties across the board from REITs and institutional investors and very few properties coming to market relative to other property types.”

Overall, analysts agree that manufactured housing REITs have strong growth potential, including the ability to expand existing sites where they own, or can acquire, additional land.

“They’ve been very aggressive about doing that because it’s so hard to find entitled land. Oftentimes the best land is on their existing properties,” said Babin.

The linked stories above are among several that involve Carlyle Group, UMH Properties, ELS and other private or public portfolio operators, often involving one hundred million to a billion dollars plus packages.

Does holding the number of new communities being created down impact the market? Of course. Does the time to fill a community – due to image or regulatory reasons – impact the market? Again, yes.

Moguls Understand Value

Credit: MHLivingNews.

The Daily Business News, MHProNewsandMHLivingNews have covered the case for manufactured housing as a viable solution to hope for the American Dream of home ownership at a reasonable price extensively, including Bloomberg making a statement to the same effect.

The ability to significantly cut down on production time, provide a high quality product to federal standards, all at a lower price point serves as the ideal solution to inventory and housing challenges. The titans of business recognize the opportunity as well, as giants and independents alike are actually “doubling down” on the industry.

Sam Zell, ELS Chair, credit, MHProNews.

ELS Chairman Sam Zell has been famously quoted as correcting misconceptions about the industry, saying during this interview, “Everyone calls them trailer parks. Pencil head,it’s not a trailer park.“

For more on manufactured housing being the solution that’s hiding in plain sight, see MHProNews and MHLivingNews Publisher L.A. “Tony” Kovach’s insight into the opportunity linked here. ##

(Image credits are as shown above, and when provided by third parties, are shared under fair use guidelines.)

The Xactly Corporation, a cloud-based company that specializes in increasing employee performance by incentivizing them and keeping their behavior in line with company goals, has been chosen by Sun Communities, Inc. (NYSE:SUI) to speed the sales compensation process and enhance workflows.

“Xactly will standardize our workflows and greatly improve internal communication around commissions so everyone involved can have access to pertinent data which will speed up our entire process,” said Marc Farrugia, VP of HR of Sun Communities, as businesswire informs MHProNews.

By having a single, easy-to-read dashboard to view plans, payments and documents, staff will have more time to concentrate on plan effectiveness. Farrugia added, “Xactly will give us a single source of truth to easily report on and analyze our compensation data so that we can ensure our compensation spend is strategically allocated.”

Since acquiring 103 MHCs from Carefree Communities, Sun, a real estate investment trust (REIT), owns and operates 337 manufactured home and recreational vehicle communities comprised of 117,000 developed sites. It’s stock is reported on the MHProNews daily stock report, as seen here. ##

(Photo credit: Sun Communities, Inc.)

Article submitted by Matthew J Silver to Daily Business News-MHProNews.

Updating a story MHProNewslast posted March 22, 2016 regarding the acquisition of Carefree Communities, Inc. from Centerbridge Capital Partners II, LP for $1.68 billion, Sun Communities, Inc. (NYSE:SUI) announces it has closed on the transaction.

Sun issued Centerbridge $225 million in shares of common stock priced at $67.57 per share, and $1.455 billion in cash, one billion of which was immediately applied to the seller’s outstanding debt to make the transaction totally debt-free.

With the acquisition, according to nasdaq, Sun adds a total of 103 manufactured home (MH) and recreational vehicle (RV) communities to its portfolio, 27,554 home sites comprised of 9,829 developed MH sites and 17,725 RV sites. Additionally, there are 396 MH sites and 2,586 RV sites suitable for development. Most of the communities are in Florida and California.

Based in Southfield, Michigan, Sun now owns and operates 337 communities with 117,000 home sites in 29 states and Ontario, Canada. ##

(Image credit: Sun Communities, Inc.)

Article submitted by Matthew J Silver to Daily Business News-MHProNews.

Southfield, Michigan-based Sun Communities, Inc. (NYSE:SUI) announces that it will release its first quarter financial results on Tue., April 26, 2016, before the market opens. That will be followed by a conference call at 11 A. M. eastern time to discuss the results, according to benchmarkmonitor. Sun closed down -1.68 percent at $67.21 in trading Thurs., April 21.

Sun owns a portfolio of 231 communities, of which 183 are manufactured home communities (MHC), comprised of 88,400 developed home sites. MHProNews reported March 22, 2016 that Sun acquired the 103 MHCs of Carefree Communities in a $1.68 billion transaction. That deal is set to close by July 9, 2016.

Subsequent to that announcement, Sun issued an underwritten public offering of 4,000,000 million shares of its common stock on March 23, 2016 to help pay for the acquisition.

If it goes through, it will make Sun the second largest REIT (real estate investment trust) in number of communities owned, right behind Equity LifeStyle Properties which owns 340 MH and RV communities. ##

(Image credit: Sun Communities, Inc.)

Article submitted by Matthew J. Silver to Daily Business News-MHProNews.

Sherkston Shores manufactured home community (MHC) in Ontario, Canada is a 560-acre resort south of Niagara Falls owned by Carefree Communities, with 1,700 manufactured homes that owners occupy from May to October on the shores of Lake Erie. There are also 80 rental cottages and 40 rustic cabins as well as conventional campgrounds, according to thespec.

Although people have been vacationing here over 60 years, ten-year-old private REIT (real estate investment trust) Carefree bought Sherkston two years ago and has invested $5 million, $2 million of which went for the waterslides in the 17,500 square-foot Family Funplex. With a waterpark, climbing wall and arcade, it is the hub of the community. The goal is to shift the focus away from the day visitors and to provide amenities for the MH owners, as MHProNews understands.

Dave Napp, CEO of Arizona-based Carefree, says most people’s image of an MHC is “the picture you see on the front page of USA Today after a tornado. I think if people saw today’s contemporary, factory-built homes, they’d get over all that pretty quickly.”

With over 100 MH and RV communities in Ontario and across the U. S., Napp sees anticipated growth among future retirees. “We think there is a deep market out there and a good 15 or 20 year window in which baby boomers will be our primary customers. This isn’t about affordable housing, it’s about an affordable lifestyle,” he said. He also sees the opportunity to cross market their MHCs in Florida for Canadian residents in the winter.##

Carefree Communities, Inc. of Scottsdale, Arizona acquired Central Park manufactured home (MH) and recreational vehicle (RV) communities in Haines City. Florida, April 23. Located 90 miles from Tampa and Orlando, the age-restricted 55+ Central Park MH has 110 homesites, and the Central Park RV community has 368 sites. Both communities have a lively social activities calendar, a priority for Carefree.

As prnewswire informs MHProNews, the company now owns and operates 102 MH and RV communities in the U. S. and Canada with 28,000 sites. A private real estate investment trust (REIT), Carefree bills itself as the fifth largest operator of MH and RV communities in the nation. This acquisition marks the 40th for the company in the last two years. Terms of the transaction were not disclosed. ##

(Photo credit: Carefree communities, Inc.)

Article submitted by Matthew J. Silver to Daily Business News-MHProNews.

One of the most historic waterfront manufactured home communities in Manatee County, Florida, recently sold to a Scottsdale, Arizona, investor. On January 23, Charles Ellis bought Two Rivers Mobile Home Park through his company Paradise Communities for $6.3 million. The previous owner, Two Rivers, Inc., of Sarasota, bought the community for $1.6 million in 1996, according to Manatee County property records.

The Bradenton Herald tells MHProNews that for the purchase price, Ellis received 130 lots in the Two Rivers community, which is located on a section of the Manatee River at 2800 State Road 64. According to the community management office, the community has 118 units. Park amenities include a club house, swimming pool, shuffleboard courts and a pier with several boat slips. Residents of the community must be 55 or older.

The community is located adjacent to Braden Castle Park, a collection of almost 200 cottages and manufactured homes that dates back to 1924. Braden Castle contains a historic site, the ruins of Braden Castle, a lime and shell mansion built by Joseph Braden in 1850. The land around those ruins was once part of an 1,100-acre plantation Braden owned.

Ellis, who previously worked as a vice president of acquisitions for national manufactured home and RV community owner Carefree, made at least one other community purchase in Florida through Paradise. Last summer, the company purchased the 105-unit Shady Haven Mobile Home Park in Englewood for $4.1 million. In addition, he said he intends to continue buying manufactured home and RV communities in Florida.

A manufactured home and RV park acquisitions expert in the Florida market for 20 years, Ellis said he chose Two Rivers for his second Florida purchase as an independent investor because “it’s a quality asset in a coastal county in Florida.”

Ellis said he does plan to own Two Rivers long term and to invest in improvements such as landscaping and signage. He has yet to determine the extent of improvements needed in the park.

“We’re evaluating that right now,” he said.

Homes in Two Rivers sell for an average of about $10,000, Ellis said. The most expensive home in the park currently is a waterfront unit on the market for $45,000. The majority of the units in the park are manufactured homes, but the housing stock also includes efficiency apartments and four single-family homes. Seventy percent of Two Rivers residents, Ellis said, are snowbirds who live there part time.

The sale is the second largest in the Manatee County manufactured home community market this year. In January, Palm Cove MHC purchased DeSoto Mobile Estates at 1219 51st Avenue for $8 million. Also selling last month was Sunset Village Adult Mobile Home Community at 3715 14th Street W., which went for $5.8 million.

During a long career with Carefree, Ellis was active in the local market. Although he left the company to start Paradise, he did some freelance work for Carefree last year, spearheading the company’s purchase of Florida Broadacre Trailer Lodge and the three manufactured home communities it owns for about $11 million.

Communities that changed hands in that April transaction were Vista del Lago on 52nd Avenue Terrace West in Bradenton, Bahia Vista Estates in Sarasota and Shadow Wood Village in Hudson. Carefree owns nine manufactured home and RV communities in Bradenton and Sarasota and dozens of others throughout Florida. ##

Carefree Communities, Inc. announced Monday that it has acquired family-owned Vedder Communities 18 manufactured home land lease communities, with 4,530 sites in California. The Vedder acquisition, Carefree says, makes them the 5th largest owner/operator of manufactured home and RV communities in the nation, boasting some 101 properties and more than 27,000 home sites.

Colleen Edwards, Carefree’s President told MHProNews, “The Vedder acquisition gives Carefree a very strong market presence in California, with communities stretching from San Juan Capistrano to Napa Valley. The Vedder Communities’ management philosophy of going above and beyond to provide outstanding customer service, safety, and top-notch facilities to its residents fits very well with Carefree’s core values.“

Carefree CEO David Napp added, “The Vedder portfolio is widely considered to be the best privately owned manufactured home community portfolio in California and one of the best in the country. This is an important strategic acquisition for Carefree, as we look to continue to grow our company in highly sought after retirement and vacation destinations in coastal markets.”

Three of the Vedder communities have won National Manufactured Home Community (MHC) of the Year awards from the Manufactured Housing Institute (MHI), including Alta Laguna in Rancho Cucamonga, California; Lemon Wood in Ventura, California; and Palos Verdes Shores in San Pedro, California. A dozen of the 18 Vedder communities are 55+ adult MHCs.